Market Spotlight: NZDUSD Hits Final Target

NZDUSD Sell-Off Continues The recent short trade published in NZDUSD hit its final target at .6450. With USD rising significantly in the last fortnights, amid an increase in sharp Fed signaling, NZD and the broader risk complex have struggled to maintain demand. Indeed, Fed tension comes amid a broader background of risk aversion linked to continuing uncertainty surrounding the Russia-Ukraine conflict. With the violence continuing, and with risks of further escalation, there are ongoing downside risks for the risk complex, including high-beta currencies like NZD. With this in mind, bears may look to hold short while the pair holds below the previous 2022 lows of .6450. Keep an Eye Looking ahead, the key focus will be on the FOMC next week. With the Fed widely expected to raise rates by .5%, a failure to do so would likely result in a sharp correction in USD. However, if the Fed were to follow through and adjust to sharp guidance as well (signaling an additional .5% rate hike to come), USD is likely to continue higher near the term. Today, the focus will be on the U.S. core PCE, which is a key inflation measure used by the Fed. After yesterday’s fall in GDP, any downside today is likely to weigh USD in the Fed next week, while a touchdown should see renewed USD buying over the weekend.

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